By Kristin Voinovich For Venture Beat
January 6, 2013 12:18 PM
Investment Bankers have traditionally been the gatekeepers of access to the capital markets. It is time for crowdfunding to play a greater role.
The caliber of underwriting firm is often an indication of the quality of the issuing company. The investment banks are paid well for that implicit endorsement, but that puts their reputations on the line. Their success is tied to the execution, after market performance and perception of the deals they complete –so they had better be selective and smart.
However, the banks are not infallible. The capital raising process has been inexorably altered by many different changes to the funding environment. I am not talking just about the botched Facebook IPO either. But the banks are pretty good.
The playing field between institutional investors and “mom and pop” is not level. The market is driven by inefficiencies and the average investor is generally on the wrong side of the spread. The differential comes down to knowledge.
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